The government faces the catastrophic prospect of default if Congress doesn't raise the debt limit within the next two months. The federal government has already reached its debt limit of $16.4 trillion, and the Treasury Department is taking "extraordinary measures" to meet debt payments.

President Barack Obama wants Congress to approve an increase in the debt ceiling without conditions, while many Republican congressmen want to tie it to spending cuts.

“I know that a lot of people are comparing it to what happened in 2011, when the markets collapsed because of the debt ceiling [fight] and downgrade” of the government’s credit rating by Standard & Poor’s, Gayed tells Newsmax TV in an exclusive interview. “The thing is, inter-market trends do not say that’s a real possibility, at least not according to the way price is behaving.”

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Government debt obviously has to shrink, Gayed says, but such a reduction isn’t necessarily a negative for the economy, as long as the private sector compensates for the loss in government economic activity.

“If we are seeing a re-acceleration of the economy, … then whatever cutbacks related to the debt ceiling or whatever happens as far as the debates go, it’s really going to be a sideshow,” Gayed notes.

He adds that the 155,000 gain in non-farm payrolls during December indicates the economy is picking up. The December jobs gain followed one of 161,000 in November.

“The trend continues albeit moderately. It looks like there is some stabilization,” Gayed says.

“That stabilization means that maybe the Fed’s zero interest rate policy, maybe its various forms of QE [quantitative easing], maybe all of this end-of-the-world talk, maybe all of that is starting to actually cause a pickup in economic continuity.”

The question now is whether the U.S. economy will benefit from Europe’s financial stabilization and the clarity for taxes provided by the fiscal cliff law, he explains. Will companies be willing to take risks now that they know Obama will remain in office?

Gayed is impressed with the strength of the U.S. and foreign stock markets, leading him to compare them to Rocky Balboa, the legendary character in the “Rocky” movies.

“This is a market which refuses to go down in any meaningful way and keeps on swinging,” he says. “It’s taken hit after hit from the negative narrative, and yet the price has been right.”

Gayed is happy to see the disagreement among Federal Reserve officials over whether it should halt QE this year. “To see that kind of debate, it’s actually probably very healthy,” he notes. “It means that the market may actually like less intervention.”

Companies may move to borrow more now, hoping to lock in current low interest rates before the end of QE sends them higher. “The Fed is putting in a certain amount of urgency by paving the way for at least cutting back on QE,” Gayed says. “That could, itself, spur economic growth.”